[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
REVIEW OF THE FISCAL YEAR 2019 BUDGET REQUEST FOR THE COAST GUARD AND
MARITIME TRANSPORTATION PROGRAMS
=======================================================================
(115-40)
HEARING
BEFORE THE
SUBCOMMITTEE ON
COAST GUARD AND MARITIME TRANSPORTATION
OF THE
COMMITTEE ON
TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
MARCH 14, 2018
__________
Printed for the use of the
Committee on Transportation and Infrastructure
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available online at: https://www.govinfo.gov/committee/house-
transportation?path=/browsecommittee/chamber/house/committee/
transportation
______
U.S. GOVERNMENT PUBLISHING OFFICE
31-307 PDF WASHINGTON : 2018
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee, ELEANOR HOLMES NORTON, District of
Vice Chair Columbia
FRANK A. LoBIONDO, New Jersey EDDIE BERNICE JOHNSON, Texas
SAM GRAVES, Missouri ELIJAH E. CUMMINGS, Maryland
DUNCAN HUNTER, California RICK LARSEN, Washington
ERIC A. ``RICK'' CRAWFORD, Arkansas MICHAEL E. CAPUANO, Massachusetts
LOU BARLETTA, Pennsylvania GRACE F. NAPOLITANO, California
BLAKE FARENTHOLD, Texas DANIEL LIPINSKI, Illinois
BOB GIBBS, Ohio STEVE COHEN, Tennessee
DANIEL WEBSTER, Florida ALBIO SIRES, New Jersey
JEFF DENHAM, California JOHN GARAMENDI, California
THOMAS MASSIE, Kentucky HENRY C. ``HANK'' JOHNSON, Jr.,
MARK MEADOWS, North Carolina Georgia
SCOTT PERRY, Pennsylvania ANDRE CARSON, Indiana
RODNEY DAVIS, Illinois RICHARD M. NOLAN, Minnesota
MARK SANFORD, South Carolina DINA TITUS, Nevada
ROB WOODALL, Georgia SEAN PATRICK MALONEY, New York
TODD ROKITA, Indiana ELIZABETH H. ESTY, Connecticut,
JOHN KATKO, New York Vice Ranking Member
BRIAN BABIN, Texas LOIS FRANKEL, Florida
GARRET GRAVES, Louisiana CHERI BUSTOS, Illinois
BARBARA COMSTOCK, Virginia JARED HUFFMAN, California
DAVID ROUZER, North Carolina JULIA BROWNLEY, California
MIKE BOST, Illinois FREDERICA S. WILSON, Florida
RANDY K. WEBER, Sr., Texas DONALD M. PAYNE, Jr., New Jersey
DOUG LaMALFA, California ALAN S. LOWENTHAL, California
BRUCE WESTERMAN, Arkansas BRENDA L. LAWRENCE, Michigan
LLOYD SMUCKER, Pennsylvania MARK DeSAULNIER, California
PAUL MITCHELL, Michigan STACEY E. PLASKETT, Virgin Islands
JOHN J. FASO, New York
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
------ 7
Subcommittee on Coast Guard and Maritime Transportation
DUNCAN HUNTER, California, Chairman
DON YOUNG, Alaska JOHN GARAMENDI, California
FRANK A. LoBIONDO, New Jersey ELIJAH E. CUMMINGS, Maryland
GARRET GRAVES, Louisiana RICK LARSEN, Washington
DAVID ROUZER, North Carolina JARED HUFFMAN, California
RANDY K. WEBER, Sr., Texas ALAN S. LOWENTHAL, California
BRIAN J. MAST, Florida STACEY E. PLASKETT, Virgin Islands
JASON LEWIS, Minnesota, Vice Chair PETER A. DeFAZIO, Oregon (Ex
BILL SHUSTER, Pennsylvania (Ex Officio)
Officio)
CONTENTS
Page
Summary of Subject Matter........................................ iv
TESTIMONY
Admiral Paul F. Zukunft, Commandant, U.S. Coast Guard............ 5
Master Chief Steven W. Cantrell, Master Chief Petty Officer of
the Coast Guard, U.S. Coast Guard.............................. 5
Rear Admiral Mark H. Buzby, U.S. Navy (Ret.), Administrator,
Maritime Administration........................................ 5
Hon. Michael A. Khouri, Acting Chairman, Federal Maritime
Commission..................................................... 5
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Admiral Paul F. Zukunft.......................................... 29
Master Chief Steven W. Cantrell \1\
Rear Admiral Mark H. Buzby....................................... 40
Hon. Michael A. Khouri........................................... 49
SUBMISSIONS FOR THE RECORD
Report, ``Federal Maritime Commission 56th Annual Report for
Fiscal Year 2017,'' submitted by Hon. Michael A. Khouri, Acting
Chairman, Federal Maritime Commission \2\
Admiral Paul F. Zukunft, Commandant, U.S. Coast Guard, responses
to questions for the record from the following Representatives:
Hon. Duncan Hunter of California............................. 37
Hon. Rick Larsen of Washington............................... 38
Rear Admiral Mark H. Buzby, U.S. Navy (Ret.), Administrator,
Maritime Administration, responses to questions for the record
from Hon. Rick Larsen, a Representative in Congress from the
State of Washington............................................ 47
----------
\1\ Master Chief Cantrell did not submit a written statement.
\2\ The report entitled ``Federal Maritime Commission 56th Annual
Report for Fiscal Year 2017'' is available online at https://
www.fmc.gov/assets/1/Page/AnnualReportFY17.pdf.
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REVIEW OF THE FISCAL YEAR 2019 BUDGET REQUEST FOR THE COAST GUARD AND
MARITIME TRANSPORTATION PROGRAMS
----------
WEDNESDAY, MARCH 14, 2018
House of Representatives,
Subcommittee on Coast Guard and Maritime
Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 11:07 a.m., in
room 2167 Rayburn House Office Building, Hon. Duncan Hunter
(Chairman of the subcommittee) presiding.
Mr. Hunter. The subcommittee will come to order.
Today we convene to review the fiscal year 2019 budget
request for the Coast Guard and maritime transportation
programs.
The United States Coast Guard is a multimission service and
the only armed service with law enforcement authorities. I have
ongoing concerns with the Coast Guard being an armed service
within the Department of Homeland Security.
On its face, the Coast Guard should fit comfortably within
the Department due to its role in defense and homeland
security; however, under the Department, the Coast Guard
doesn't fare well.
The Service is hampered by lackluster funding requests that
don't meet the needs of the Service, and as we heard at last
week's hearing, the Department restricts what performance
measures the Coast Guard publicly reports.
Admiral Zukunft, during your 4 years as Commandant of the
Coast Guard, we have seen the Service make progress reforming
its acquisition process, acquisition programs for the National
Security Cutter and the Fast Response Cutter. While they have
had their issues in the past, they have been producing much-
needed assets for the Coast Guard. The Offshore Patrol Cutter
is coming online this year, and hopefully soon we will see the
start of construction for a polar icebreaker.
Last year, the Service was instrumental in the Federal
Government's response to Hurricanes Harvey, Irma, and Maria.
The Coast Guard's hurricane response efforts were in addition
to all of the everyday actions the Coast Guard does to protect
our Nation.
One of which is drug interdiction. Last year, the Service
had a record-breaking year for cocaine seizures, having stopped
over 450,000 pounds of cocaine worth over $6 billion wholesale.
These efforts often go unsung, and we do not want that. We
want the Coast Guard to be known for the valor of their
servicemembers, because we know they take risks every day in
defense of this Nation.
We need to understand the needs of the Service. Congress
needs information to conduct proper oversight and to support
programs with adequate funding. The lack of information on how
the Service is meeting its statutory missions and how its
assets are meeting or not meeting performance goals leaves
Congress without much-needed information and could lead to
inadequate budget requests, and more importantly, inadequate
funding levels. We would like you to help us help you.
The Coast Guard already falls behind the other services. It
is the only armed service subjected to nondefense discretionary
budget requirements. So unlike the other services, this is not
considered defense spending. This places the Coast Guard in
competition with all nonmilitary discretionary spending despite
the Coast Guard being a military service.
The lack of budget clarity that the nondefense
discretionary budget has imposed on the Coast Guard has
definitely impacted the Service in its ability to adequately
and consistently fund its programs. As I have said before,
without question, this is a risk to national security and
should compel a more serious budget approach.
When the Service is active in time of war, it works as part
of the Navy. But its everyday missions are critical to our
national defense. I repeat, every day the Coast Guard's
missions are critical to our Nation's defense, and the Coast
Guard needs sufficient funding to acquire its assets and
effectively do its job.
Admiral, this is your last hearing in front of this
subcommittee. And on behalf of the ranking member, I am sure he
will have something to say, too, but I just want to say thank
you for your loyalty, steadfast service to this Nation. And we
just enjoy being with you.
It is great to see the Coast Guard turn more in a Marine
Corps direction. So as a marine to coastie, we just want to say
thank you, and keep on weaponizing your boats.
MARAD is also with us today. The subcommittee shares
jurisdiction over the Maritime Administration with the Armed
Services Committee, having jurisdiction over the nonnational
security aspects of the merchant marine. The subcommittee
understands the critical role U.S. mariners have in supporting
domestic shipping operations, as well as defense operations,
including the Maritime Security Program and sealift.
MARAD has been an integral part of the subcommittee's
Military to Mariner roundtables and discussions to assist
active and retired military mariners to move into civilian
mariner positions.
The subcommittee looks forward to working with MARAD on
these important issues. I thank our witnesses for being here
today, and I look forward to hearing your testimony.
I will now yield to Ranking Member Garamendi.
Mr. Garamendi. Mr. Chairman, thank you. Thank you for
calling the hearing.
Once again, it is a welcome change to be able to talk about
a funding increase rather than to try to figure out what to do
with less money.
First off, Admiral Zukunft, thank you so very much for your
service. You have been a pleasure to work with over this period
of time. And the Coast Guard in the recent hurricanes performed
admirably, way beyond the expectations--well, not beyond our
expectations, but in a very, very difficult environment. And we
know that has to do a lot with the command structure, and I
know that you are at the top of that. So thank you so very
much.
I also see that, Mr. Cantrell, you are also going to
retire. I want to thank you for your service. And I am sure
that all of the men and women in the Coast Guard appreciate
what you have been able to accomplish representing them so well
in your position as well as before this committee.
I guess we will look forward to Admiral Schultz and see how
he bears up under our severe questioning. I am sure he will do
very, very well with it, and I know that he has a significant
person to follow.
Now, back to the budgets. It is not just about the numbers,
but it is really how they all fit together. We have much better
numbers to work with. That is not my concern.
Moreover, the real problem with this budget is, does it
represent a change in which we can look forward to the future
with wholesome, full budgets, or is it just an anomaly and we
will go back to where we have been over the last several years,
and that is trying to figure out how to do more with less.
Last year's budget, by example, requested the Coast Guard
be cut by 14 percent. This year we are looking at an 11-percent
increase. Well, we think that is a significant improvement. But
what about the years in the future?
It is my hope that among the options, we are going to see
increased budgets for the Coast Guard.
I note that the President is talking about his wonderful,
beautiful border wall. I think he said $18 billion. Probably
closer to twice that. But nonetheless, if you want to stop the
drugs, as he apparently wants to do, better to spend that money
on the Coast Guard where you have an extraordinary record.
Tariffs. Interestingly, the President unilaterally imposed
tariffs last week on steel and aluminum, but in his budget he
proposes not to use that newfound opportunity for the American
steel industry to build ships, but rather for MARAD to go out
and purchase a couple of used hulls and to somehow repurpose
those for the academies. But what happened to the multiservice
vessels that were authorized in the budget?
I am going to ask you, Admiral Buzby, about that. We think
that we had a pretty good plan, and we are not interested in
buying a bunch of foreign ships for the maritime academies, but
rather to make them in America.
So what are we going to do? Well, we are going to find out
where you are coming from today.
Additionally, the Title XI Maritime Loan Guarantee Program
seems to have been zeroed out. So what does that mean for our
ships that we need to build for the recycling program and for
the Marine Highway Program?
All of this makes very little sense. We need to put
together a budget that actually meets all of the needs and not
cuts inappropriately.
So while the top line looks good, you get into the details
and we have problems. We are going to get into that in detail.
I yield back.
Mr. Hunter. I thank the ranking member.
And I just ask that we put on timers, too, because we never
have anybody here at our hearings very often, and now we have
quite a few people. We will stay on track.
Mr. DeFazio. Mr. Chairman, may I?
Mr. Hunter. Absolutely.
The ranking member of the full committee is recognized.
Mr. DeFazio. Thanks, Mr. Chairman.
I would like to congratulate and thank Admiral Zukunft on
his pending retirement. There was something about severe
questions, and there don't need to be any today. I think we
have come a long way in the last 4 years in terms of the Coast
Guard's future looks better.
We are finally getting some of the recognition that all of
us have been arguing for in terms of adequate funding for the
resources you need. Instead of starting with a proposed cut, we
have a proposed increase. Inadequate, but a start.
We are finally moving ahead with the first new icebreaker,
but we have other things that are still underfunded. Although
there is $135 million for constructing and renovating shoreside
infrastructure, there is still a $1.6 billion backlog. We still
have to look at a whole new fleet of helicopters, buoy tenders,
heavy lifeboats. There is an incredible list of things that we
still need for the Coast Guard.
And when I think about this idiotic wall, I just think,
boy, if we had the money that is being proposed for the wall
that anybody can go over, under, or around, particularly on the
oceans, wouldn't it be better to spend those billions of
dollars on fully recapitalizing and meeting the needs of the
Coast Guard and other real defenses to the integrity of the
United States and to interdict smuggling.
Chief Cantrell, I also want to congratulate you. Thanks for
your many, many years of service. And I don't know where you
are going, I know he is going someplace warm, but I wish you
well.
This was a new issue to me about OMB and the replacement
ships with MARAD, and that causes me tremendous concern. And
like the ranking member, I can't believe that we can't find
American hulls. And even for that much money, I think we can
build a couple of ships. I am not quite sure what the
specifications are. But that seems like a fair amount of money.
And if we are going to repurpose foreign hulls, I am going to
be really not very happy about that. I think three, hopefully,
at least, and maybe we can enlist the full committee chairman.
With that, I would yield back the balance of my time. Thank
you.
Mr. Hunter. I thank the gentleman.
Today we will hear testimony from Admiral Paul F. Zukunft,
Commandant of the United States Coast Guard; Master Chief
Steven W. Cantrell, Master Chief Petty Officer of the United
States Coast Guard; Rear Admiral Mark H. Buzby, United States
Navy, retired, Administrator, Maritime Administration; and the
Honorable Michael A. Khouri, Acting Chairman, Federal Maritime
Commission.
Admirable Zukunft, you are now recognized to give your
statement.
TESTIMONY OF ADMIRAL PAUL F. ZUKUNFT, COMMANDANT, U.S. COAST
GUARD; MASTER CHIEF STEVEN W. CANTRELL, MASTER CHIEF PETTY
OFFICER OF THE COAST GUARD, U.S. COAST GUARD; REAR ADMIRAL MARK
H. BUZBY, U.S. NAVY (RET.), ADMINISTRATOR, MARITIME
ADMINISTRATION; AND HON. MICHAEL A. KHOURI, ACTING CHAIRMAN,
FEDERAL MARITIME COMMISSION
Admiral Zukunft. Good morning, Chairman Hunter, Ranking
Member Garamendi, and ranking member of the full committee, Mr.
DeFazio, distinguished members of this committee. I appreciate
the opportunity to testify today and ask that my written
statement be entered into the record.
Mr. Hunter. Without objection.
Admiral Zukunft. The Congress, and especially this
subcommittee, has gone to great lengths to challenge the status
quo, demand transparency regarding our needs, and serve as a
strong voice for the men and women of your United States Coast
Guard.
Examples, such as helping us establish the polar icebreaker
integrated program office, your support in products like the
unfunded priorities lists, typify what this committee has done
for the United States Coast Guard. Your leadership and vision
have helped us offset uncertainty in the budget cycle and have
positioned us to receive the first meaningful funding increase
since the Budget Control Act was passed in 2011.
And, yes, we are working with the administration to
finalize our long-term major acquisition project and the latest
Capital Investment Plan and unfunded priorities list. Many of
these were submitted months ago. We continue to work with our
Department and with the administration. We know you need those
so you can help us in your endeavors to support the United
States Coast Guard. You have my commitment that we will get
these to you just as soon as possible, Chairman.
Following a series of devastating hurricanes, the Coast
Guard launched one of the largest responses ever, culminating
in the rescue of nearly 12,000 people. This was an all-hands-
on-deck campaign, but it came at a cost. And I thank you and
this Congress for the $835 million to address Coast Guard
response costs and rebuild damaged infrastructure to modern
standards.
And while so many endured these natural disasters,
transnational criminal organizations continue to raise havoc in
the Western Hemisphere. Last year, our campaign to protect the
U.S. border, thousands of miles from our land border, netted
over $6 billion worth of cocaine before it could reach our
shores.
And equally important, we referred 606 smugglers to the
Department of Justice for prosecution here in the United States
where we prosecute 100 percent, less than 5 percent prosecution
in their countries of origin, effectively advancing security
and prosperity in our backyard.
Our cybersecurity program of record safeguards cyberspace
and we secure our maritime critical infrastructure--ports,
waterways, and commerce--that translates to $4.6 trillion in
economic activity on an annual basis.
And we continue to be a sound investment. We earned our
fifth consecutive clean financial audit opinion, the only armed
service to do so, and our major acquisition programs continue
to deliver assets that meet performance cost and schedule
milestones.
Given our important work in the high latitudes, coupled
with an ever-increasing assertive Russia and China, I am very
pleased the President's budget includes $750 million for the
polar icebreaker program as well. Our request for proposals,
released just 2 weeks ago, has energized the U.S. industrial
base and keeps us on track. We are as close as we have ever
been in over 40 years to recapitalizing our Nation's polar
icebreaking fleet, and we must keep this momentum going.
The budget also advances the recapitalization of our aged
fleet of 35 inland construction and river tenders, some over 70
years old, in all with an average age of 56. Replacing these
vessels with a modern, modest fleet of Waterway Commerce
Cutters is a matter of economic and National Security Cutters
as these ships are necessary to sustain our vital maritime
transportation system, part of that infrastructure, if you
will.
While this progress is meaningful and very encouraging, it
is simply not enough. We need to continue building tomorrow's
Coast Guard. Years of fiscal constraint under Budget Control
Act caps have forced funding offsets and reduced our force
structure. Going forward, we require 5 percent analyzed growth
in our operations and maintenance account and a minimum of $2
billion in our acquisition account, a small ask for a service
that provides great return on investment.
I have been honored to work alongside you these past 4
years. The more predictable the resource allocation process,
the more ready our Coast Guard becomes. We are on the right
track.
Thank you, Mr. Chairman, Ranking Member, and members of
this committee, and I welcome your questions.
Mr. Hunter. Thank you, Commandant.
Master Chief Petty Officer of the Coast Guard Cantrell, you
are recognized.
Master Chief Cantrell. Thank you, sir. And good morning,
Chairman Hunter, Ranking Member Garamendi, and distinguished
members of this committee. It is a privilege to appear before
you today to represent the workforce of your United States
Coast Guard.
As an Armed Force of the United States of America, as well
as one of the Nation's lead maritime law enforcement and marine
safety agencies, our men and women represent the finest coast
guard in the world. These dedicated individuals are on the
front lines every day carrying out major operations globally,
as well as protecting our homeland at our maritime borders and
inland waterways.
When disaster strikes, your Coast Guard responds with an
unmatched humanitarian spirit. And I want to thank committee
members and staff that have visited various Coast Guard units
throughout a remarkable 2017.
While visiting our units, you heard directly from the
selfless people who wear the uniform of one of our Nation's
five armed services. I hope those visits provided you with
ground truth about the effects your decisions have on our
personnel, their families, and their careers.
I also want to thank you for your continued support of our
recapitalization efforts, which, as you know, are making
tremendous impact on an international level. Our new platforms
are more capable, allowing our personnel to carry out their
missions with the latest and most technologically advanced
systems available.
We continue to have devoted Americans volunteer to serve
and reenlist in our multimission service, and not just as
individuals, but often as a family.
I, along with our senior leaders, remain deeply committed
to providing our people with state-of-the-art platforms and
world-class quality of life for them and their families as they
serve this great country.
I would continue to ask that we not lose sight of the fact
that we still have some work to do as many of our Coast Guard
men and women continue to serve in cutters and at stations that
are older and less capable.
But besides the challenges an aging fleet presents to our
military workforce, in many places members and their families
continue to face quality-of-life challenges. With many of our
workforce serving at remote units far from bases or military
installations, and in many cases high-cost coastal areas,
access to affordable housing, adequate medical services, and
suitable childcare will always be a challenge.
The sacrifices our members and their families make
throughout a typical career are virtually impossible to
quantify, and we simply cannot afford not to invest in them and
their future.
I would like to take a moment to thank you for the language
in the 2018 National Defense Authorization Act, which amended
title 37, United States Code, section 476, allowing
reimbursement of relicensing costs for our military spouses who
are forced to move due to military relocation.
I also thank you for the support received in other
important focus areas, such as professional credentialing and
VOW [Veterans Opportunity to Work] to Hire Heroes Act
requirements for our Coast Guard personnel.
We look at our new ships and aircraft that are the result
of this committee's commitment to our Service. However, the
efforts that we invest in our people are what breathes life
into these awesome assets and allows our families to continue
to support us.
These investments should be nonnegotiable in budget
discussions. Investment and modernizing our aging accession
points, along with our other shore infrastructure, should be a
priority as it is just as crucial to Coast Guard mission
success as new modern ships and aircraft. I ask that you ensure
our fiscal year 2019 appropriation reflects your commitment to
them.
I know you are keenly aware of these challenges, and I am
grateful for the support from this committee as we continue to
address each of them. While our recruiting efforts continue to
be stronger than any time in the last decade, and we are
meeting our goals, I reiterate that we must continue to invest
smartly if we want to retain the talent that is lining up at
our recruiting offices.
Mr. Chairman, members of the committee, on behalf of the
servicemembers of your United States Coast Guard and their
families, I thank you for your continued and very public
support and for the opportunity to highlight some of our
successes and challenges.
And as this will be my last opportunity to testify before
you before I retire, let me personally say thank you. It has
been a true honor to wear this uniform for nearly 35 years in
service to our great country and such a remarkable opportunity
to appear before you over the last 4 years to tell you about
the needs of some pretty amazing Americans, United States
coastguardsmen. Thank you.
Mr. Hunter. Thank you, Master Chief.
Admiral Buzby, you are recognized.
Admiral Buzby. Good morning, Chairman Hunter, Ranking
Member Garamendi, distinguished members of the subcommittee. I
appreciate the opportunity to discuss the President's fiscal
year 2019 budget priorities for the Maritime Administration.
The President's $696.4 million budget request for MARAD is
focused on strengthening the U.S.-flag fleet, investing in the
education and training of the next generation of merchant
mariners, and supporting our Nation's commercial and national
security objectives.
In 2014, U.S. maritime freight activity supported $4.6
trillion of economic activity, providing access to the world's
markets and generating revenues equivalent to 26 percent of our
GDP.
The U.S.-flag fleet in international trade, however,
currently carries less than 2 percent of our annual foreign
trade, and the U.S.-flag presence in international commercial
trade is at a historic low of 81 ships. We must grow our share
of overseas maritime commerce to remain economically viable
globally.
As the U.S.-flagged deep-sea fleet dwindles and the U.S.
becomes increasingly reliant on foreign-flagged shipping, we
also negatively impact national security. The pool of U.S.
merchant mariners who crew our ships in peacetime commerce are
the same dedicated Americans we depend upon to answer the call
to man our surge sealift fleet in times of national emergency.
The refusal of some foreign-flagged ships to deliver DoD
cargo during Operation Desert Shield and Storm illustrates the
danger of relying on another nation's shipping to move our
military cargo in a crisis.
The Maritime Security Program, or MSP, provides direct
annual stipends for 60 active, militarily useful, privately
owned U.S.-flagged vessels and crews in international trade.
This program ensures access to U.S.-flagged ships in
international trade and, critically, the intermodal networks
needed to move military equipment and supplies in national
emergencies.
The President's budget requests $214 million, or $3.6
million for each ship enrolled in the MSP. This request is
recognized as less than the fully authorized level for MSP. It
reflects hard choices that had to be made as the administration
pursues rebuilding DoD capabilities. The Department and MARAD
strongly support MSP and recognize the critical contribution it
plays in the Nation's security.
Funding from the Department of Defense in fiscal year 2019
will allow MARAD to maintain 46 surge sealift support and
special mission vessels from the Ready Reserve Force in a 5-day
readiness status and begin service life extensions for several
ships as part of a comprehensive recapitalization program for
this fleet, which has an average age of 43 years.
Survival of the U.S.-flag fleet and our ability to crew the
surge sealift force, depend, deploy and sustain our military,
requires an adequate pool of U.S. merchant mariners. Most U.S.
Coast Guard credentialed officers who crew these ships graduate
from the United States Merchant Marine Academy and the six
State maritime academies.
The President's budget request includes $74.6 million for
Kings Point, $70.6 million of it to support academy operations,
and $4 million to fund capital building and infrastructure
improvements for this 75-year-old institution.
Budget requests also includes $24.4 million to support
State maritime academies, $2.4 million of which is to provide
financial assistance to 75 cadets who agree to incur a
Government service obligation and $22 million for the
maintenance and repair of our aging fleet of federally owned
training ships.
The administration is amending the President's budget
request to include $300 million to replace two of the oldest
training vessels to ensure the availability of safe and
efficient vessels to meet critical mariner training needs now
and in the future.
Finally, the budget requests $30 million for the MARAD ship
disposal program, the majority of which will be used to
continue the required decommissioning of Nuclear Ship Savannah
while in protective storage.
These programs, supported by the President's fiscal year
2019 budget request, represent MARAD's top priorities. We will
keep this subcommittee apprised of the progress of our program
activities and initiatives throughout the coming year.
I appreciate the subcommittee's continuing support for
maritime programs, and I look forward to working with you on
strengthening our Nation's maritime transportation system and
bolstering our fundamental, foundational Jones Act.
I request that my written statement be entered into the
written record of this hearing. I am standing by for your
questions, sir.
Mr. Hunter. Thank you, Admiral.
I would like to recognize Mr. Khouri, but before I do, I
want to recognize Rebecca Dye, sitting behind you, and Dan
Maffei. Rebecca was also a committee staffer and a coastie. You
have got the trifecta.
So welcome.
Mr. Khouri, you are recognized.
Mr. Khouri. Thank you. Chairman Hunter, Ranking Member
Garamendi, and members of the subcommittee, thank you for the
invitation to appear today. With permission, I will summarize
my written remarks and request that the written testimony and a
copy of our fiscal year 2017 annual report be included in the
record.
[The fiscal year 2017 annual report of the Federal Maritime
Commission is available online at https://www.fmc.gov/assets/1/
Page/AnnualReport
FY17.pdf.]
Mr. Khouri [continuing]. I also recognize and thank
Commissioner Dye and Commissioner Maffei for joining me today.
The FMC's mission is to ensure a competitive and reliable
international ocean transportation supply system that supports
the U.S. economy and protects the public from unfair and
deceptive practices.
As the Commission monitors and regulates key sectors of the
container shipping industry to assure competition and integrity
for America's ocean supply chain, the Commission is meeting its
mission, and our U.S. exporters, importers, and consumers are
the ultimate beneficiaries.
We have seen significant change in the ocean transportation
system over the last few years. The number of major global
shipping companies decreased from 21 to 12. With new
construction, global fleet capacity has increased to 5,200
containerships and 21 million TEUs [20-foot equivalent units]
of capacity. This capacity increase outran global cargo demand,
resulting in overcapacity in nearly all trade lanes.
Nine of the twelve major ocean carriers are members of
three global vessel operation alliances. A reassuring data
trend, however, shows us that even with the mergers and new
carrier alliances, the individual ocean carriers continue to
independently and vigorously compete on pricing and overall
capacity decisions, providing evidence that healthy competition
continues.
Industry analysts and shipper interests recognize that the
alternative to well-regulated vessel alliances would be further
consolidation in the industry with fewer ocean carriers and
less service options.
Another positive development, carrier agreements that
contain authority to discuss rates, have experienced a steady
decline. Five such agreements terminated in the past few
months.
The Commission has responded to these structural
developments with new agreement negotiation practice and
enhanced monitoring programs. We have insisted on narrower
agreement authority and more clear, definite language.
For all agreements, our staff maintains a careful watch on
industry trends, being vigilant for indications of
anticompetitive behavior.
Marine terminals and port authorities have shown new
interest in using cooperative agreements in their operations.
Terminals are cooperating in new ways as they address the
challenges of larger vessels unloading more containers at each
port call and the related port infrastructure requirements and
developing collective solutions to mitigate cargo bottlenecks.
On the regulatory front, the Commission continues to look
for ways to aid compliance with statute and regulatory
requirements for our stakeholders. Global supply chain
operations benefit from less regulation through lower cost that
pass through to our U.S. exporters, importers, and consumers.
Commissioner Dye recently presented the final report of the
Supply Chain Innovation Team Initiative that highlighted the
need for greater information visibility across the ocean
freight delivery system.
In December 2016, the Coalition for Fair Port Practices
filed a petition asking the FMC to begin a new rulemaking
proceeding to address practices by marine terminals and ocean
carriers related to demurrage, detention, and related fees. We
received numerous comments and then held 2 days of public
hearings in January. The Commission recently voted to institute
a formal investigation to develop a full factual record.
Following her experience with the Supply Chain Innovation
Team Initiative, Commissioner Dye agreed to serve as the fact-
finding officer. The investigation report is scheduled for
December of this year.
Regarding our budget, our requested level of funding for
fiscal year 2019 is $27,490,000. The FMC is a small agency
charged with a focused competition and commercial mission and a
need for specialized staff, including a high percentage of
economists and attorneys, career fields that tend to fall in
the upper GS pay scales. The bulk of the Commission's budget,
approximately 86 percent, is dedicated to these salaries and
rents.
Thank you for your attention, and I will be pleased to
answer any questions.
Mr. Hunter. Thank you, Mr. Khouri.
I am going to now recognize Members for questions, starting
with myself.
Commandant, as you look back over the last 4 years, just,
if you would, highlight some things, lessons learned, saved
rounds, and the biggest challenges that your successor is going
to have to face, from your point of view.
Admiral Zukunft. Thank you, Chairman.
So as I look back 4 years ago, we were very focused on two
major acquisitions, and that is security cutter, but more
importantly, the Offshore Patrol Cutter. But we didn't really
look outside the scope of those major acquisition programs.
We started applying a strategy driving a budget approach to
the United States Coast Guard, rather than coming to you asking
you what we need, but explain why we need it, but how that fits
within the national security framework.
As we look at where the Department of Defense is going
within the national military strategy, but where are they not
going? You don't see a national military strategy that
addresses the Western Hemisphere, nor do you see one that
addresses the Arctic. As an armed service, we can close those
gaps, and then with the unique authorities that we have, we can
play in all of those areas.
So with the support of this committee, we are now
modernizing our entire fleet of Coast Guard cutters: the
National Security Cutters, Offshore Patrol Cutters, the Fast
Response Cutters, polar icebreakers, and now our Waterway
Commerce Cutters.
We have created a cyber program of record. We have a Cyber
Protection Team up and running. Next year, we will have a cyber
curriculum at our United States Coast Guard Academy.
Daily we sail into harm's way. For the last 2 years, we
have had record removals of cocaine. I have been able to meet
with the Presidents of every country, except Nicaragua, in
Central America, multiple times with President Santos, to put
pressure on them to stop the movement of drugs coming through
their country destined for the United States.
In 3 weeks, the United States Coast Guard, Mexican Navy,
Colombian Navy, we will be patrolling together for the first
time ever in the eastern Pacific.
But as we sail into harm's way, and as we saw during last
year's hurricane season, in the last 4 years we have not lost
one Coast Guard life in the conduct of conducting our hazardous
operations. And to that, I owe great credit to our officers in
charge, our commanding officers, to balance risk and at the
same time carry out some of these, quite honestly, very heroic
missions.
And as we are modernizing, we have not been doing it at the
expense of force structure. We are growing the force and we are
growing the fleet.
There is no better time to join the Coast Guard than right
now, and we are seeing that at our recruiting stations, the
people that not only want to join the Coast Guard, they want to
stay in the Coast Guard.
So what concerns me as I look out beyond 2019? Uncertainty.
We have got two tremendous at-bats, as I like to call it, in
2018 and 2019. But there are many more at-bats. And was
mentioned, is this an anomaly? And so what we need is going to
be predictable funding as we look in the out-years going
forward.
That will be the most critical aspect, is to convey the
value proposition of the United States Coast Guard, demonstrate
that we can be accountable for these dollars, as we have had
the last 5 years with clean financial audit opinions, with
responsible acquisition programs that deliver on-time, on-
budget programs that easily meet and many times these new
assets exceed our operational requirements, as we have seen
with the National Security Cutter.
So challenges ahead, but, again, with the tremendous
support, and taking away some of those huge uncertainties,
including what could have been a 14-percent reduction to our
funding base. We would not have prevailed last year during
Hurricanes Harvey, Irma, and Maria if we did not have that
fiscal support.
So support here, challenges ahead, but we are clearly on
the right trajectory. And really, since 2011, we are finally
seeing an upward turn in our appropriation.
Thank you.
Mr. Hunter. Thank you, Commandant.
Master Chief, same question, what do you see as the
challenges for your successor? And I thought you guys did left-
seat, right-seat carryover to the next Commandant, but you
don't. The next Commandant brings in his own senior enlisted
person, right?
Master Chief Cantrell. That is right.
Mr. Hunter. So what do you think, Master Chief?
Master Chief Cantrell. Well, and I would like to talk about
a couple of successes and accomplishments. First, we got--well,
he has left--we got Congressman DeFazio out in a motor lifeboat
out in the middle of a Columbia River bar last year and got him
wet. So that was an opportunity for him to see the real good
work that our folks did.
But over the last couple years, we have had a couple of
housing areas that have opened up. We have made some modest
investments in some of our older housing. We have been able to
get our childcare reimbursement program enhanced so that our
folks are getting their reimbursements a lot quicker. And with
the help of this committee, particularly over the last 3 years,
of being able to protect our Basic Allowance for Housing,
particularly for dual military couples, and I appreciate that.
And we have really put our focus on leadership development
from the time that they leave boot camp all the way through to
where they are master chiefs, so that we are really training
our reliefs and our reliefs' reliefs in the best possible way.
And one that we are really proud of is, as an armed
service, 4 years ago, our recruits were not firing live
ammunition at boot camp. They were using a simulator. And we
were able to turn that around and get our folks and find
resources to get them to where they are actually going to a
range and shooting live ammunition and getting qualified before
they go out. And as a leading maritime law enforcement agency,
that was just really, really important, and we have been
successful there.
For my relief, still got work to do. I think we still need
some more childcare centers. And while we do have money for
this year and next year to get a new child development center,
we need to continue to work that, particularly in some of our
remote areas that don't have access to DoD facilities.
A continued investment in our accession point. Our basic
training facility in Cape May is old, it is in need of repair.
There are some plans over the next 10 years to rehab that, and
we just need to keep the pressure there.
And professional credentialing and licensing, which was
required by the NDAA in 2015. We need to get after that and
give that to our folks as they transition out of our Service
and give them the things that they need.
And those are the things that I will pass along to my
relief later this month, hopefully.
Mr. Hunter. Thank you, Master Chief.
And, Commandant, again, the last 4 years, I realize this is
my sixth budget hearing on this, the last 4 years I think was a
sea change for the Coast Guard in the direction that you are
going, and it has been an honor to be a part of it.
Mr. Garamendi.
Mr. Garamendi. Thank you, Mr. Chairman.
We have spent the last 4 years trying to figure out how we
are going to get a heavy icebreaker. We are well on track to do
that.
Admiral, could you bring us up to date on where we are with
the heavy icebreaker and, specifically, the funding issues for
the first, second, third?
Admiral Zukunft. Thank you, Ranking Member. And as you
know, as we look, it is not finalized yet, but certainly the
2019 budget, very optimistic, with an appropriation that gets
us an icebreaker with DHS funding.
As we all know, there is language in the NDAA, the National
Defense Authorization Act, that puts the onus on the Department
of Defense to provide one icebreaker.
So there is still more work to be done in terms of how that
funding is sequenced. We need more than one icebreaker. The
program of record, it is six. And then going forward, we need
to look at block buying these.
And there is language in the request for proposals for the
five potential contractors to submit that as well so we can
make an informed decision, because this is the highest risk
mission that we have right now. I have nothing else I can send
down to Antarctica in my inventory right now if our only heavy
icebreaker should become beset in ice.
So that is the additional work that needs to happen going
forward with our polar icebreaker program.
Mr. Garamendi. The budget augmentation has some $700
million. My personal opinion of that, that is for the second
and third icebreakers and we ought not relieve the Department
of Defense from funding the first icebreaker.
That is where I am coming from on it. We will see how all
that works out into the future as we put together the new NDAA
and the appropriation, the omnibus now underway, then the 2019
appropriations.
I toss that out and say that is the bottom line, and
hopefully that will be the way it is, so that that $750 million
doesn't relieve the Department of Defense from its current
obligation to fund the first icebreaker.
Going forward, we have questions, really I want to get to
MARAD and Admiral Buzby. And this has to do with the National
Security Multimission Vessel. Once again, the addendum to the
budget indicates that there is $300 million to buy some laid-
up, used, rusty foreign-built hulls, rather than the new
National Security Multimission Vessel.
Let's get into it, Admiral Buzby. Where are we with this?
And are you really serious as a representative of the
administration to toss out all the work that has been done and
the design? And by the way, where is the design of this new
multimission vessel?
Admiral Buzby. Thank you for the question, sir.
First, the design is alive and well. It is fairly mature
and could be built.
Mr. Garamendi. Fairly mature is what I would call squishy
words. Exactly where is the design? Is it completed?
Admiral Buzby. It is not ready to build from. It would need
to go one further step into detail design and advanced
procurement. That would be the next step, which would----
Mr. Garamendi. So it is good to go to the next step.
However, the administration is taking us to a bunch of rusty
buckets.
Admiral Buzby. Well, sir, the reason, I think, that the
request was made the way it was, was due to the timeframe.
Given the funds that are potentially in the fiscal year 2018
budget, which we don't know for sure yet, given the fact that
we are bumping up against the stops with the Empire State,
having to get something in place for her in 2019, the nearest
path, now that we are kind of getting in against the stops, was
to go on the open market to find, not necessarily a laid-up
ship, a ship that is available.
And it could still be a U.S.-built ship. We are going to
cast a very wide net to see what is available to then upgrade.
Mr. Garamendi. So if we follow that, what happens to the
whole concept of a multimission vessel?
Admiral Buzby. I think it is still alive.
Mr. Garamendi. I think it just sunk.
Admiral Buzby. The business case is still there that a new
ship should be procured. That still exists.
If money were to materialize and we could get started on a
ship sooner, a new ship, we could build a new ship. We have the
capability to do that. But the time is what is working against
us right now.
Mr. Garamendi. Let me just be very clear: No way, no how
are we going to allow you to go out and buy a bunch of rusty
old hulks rather than continue with what we have been working
on for the last several years, and that is the concept of a
multimission vessel. So keep that in mind.
Admiral Buzby. Yes, sir.
Mr. Garamendi. There is $300 million that is somewhere out
there. And I will do everything I can, and I think the
committee may very well be supporting it, at least the ranking
member indicated he did.
Admiral Buzby. I look forward to working with you on that,
sir.
Mr. Garamendi. My time has expired, and we are going to do
the best we can to stay to our 5 minutes.
Thank you, Mr. Chairman. I yield back.
Mr. Hunter. I thank the gentleman.
Mr. Mast is recognized.
Mr. Mast. Thank you, Chairman.
I will just start by saying, Master Chief, I think you are
at about 2 months and a wakeup from what we talked about.
Congratulations. Thank you for your service to this country. It
is incredible. It has been an honor to be able to question you
numerous times out here. And I am just very proud to have you
join us numerous times on these panels here. So thank you for
your service to this country.
Commandant, I have just got a couple of quick questions for
you, one local, one more broad about airframes. But locally, at
my level, you guys have been doing a great job doing a
navigation feasibility study in my area on our big waterways.
If you could just have your folks get me a completion date on
that, it doesn't have to be in this hearing, but get me a
completion date on that, I would appreciate that greatly. I
just thought I would take the opportunity to ask for that.
Looking more at the airframes, what I wanted to ask was
about this. And I understand that the Coast Guard is looking at
a lot of different courses of action to keep the fleet of MH-
60Ts up, operational, your workhorse for search and rescue.
Love having them in the area. You know, I am a boater that gets
out in Fort Pierce and Fort Lauderdale and Miami, so I like
having you guys out there.
But if you are going to keep those flying until the 2030s,
I am also told that those average flight hours on those
airframe are about 15,000 hours, so it is a pretty good amount
of time. And, of course, we all realize on this committee how
the Coast Guard is really constrained in terms of resources.
And so in that, I was wondering if you could answer, have
you guys been looking at the purchasing of new cabins or
airframes that would basically zero-time those aircraft? Is
that something that you all look at?
Admiral Zukunft. Thank you, Congressman, and we will get
those waterway studies to you as well.
So with our two helicopters, the H-60 Sikorsky, which is
our long-range helicopter, we are actually taking what we call
sunset airframes from the other armed services, and we
completely renew these, re-engine them. And what we end up with
is a like-new H-60 airframe. We reset the hours on it. And we
are acquiring these at half the cost of a new airframe.
Our H-65 Dolphin model is now in its fifth spiral
development, if you will. They have been re-engined. It is a
composite airframe. And when I first deployed with these
helicopters on my ships back in the late 1980s, when they first
hit the fleet, they actually have a much greater reliability
today than they did when the first generation of this airframe
came out. And much of this is being done through self-help.
As we look at our 20-year investment plan, starting in
about the year 2033 is when we start recapitalizing our short-
range airframes. And then overlaid with that is going to be our
long-range H-60 airframes.
And the key decision point at that point will be, what do
we have in our unmanned aerial inventory? We are also working
on manned aerial systems to include land-based. And then, do we
look at a one-airframe model or do we look at a two-airframe
model, recognizing there are great economies of scale,
training, and the like, inventory, parts management, if you
have one airframe?
And then looking across the Department of Homeland
Security, especially within Customs and Border Protection, to
look at commonality across the Service, but we are also part of
a joint service, to make sure that we have interoperability
there as well.
I feel quite comfortable with the timeline that we have set
right now, just given the reliability and the work that we are
doing organically within the Coast Guard to maintain these
airframes.
Mr. Mast. So this helps you stretch the dollar, and you
could easily say this is much more than a Band-Aid, this is
good long term.
Admiral Zukunft. Near term and long term. And these are
more than Band-Aids. We are flying these 800 hours a year. The
reliability rate, we had over 90 airframes down in Harvey,
Irma, and Maria, not one of those airframes missed a mission. I
think it is a testimony to the wrench turners that often don't
get the due credit, the maintainers, if you will, of this
squadron of aircraft.
Mr. Mast. Thank you. Thank you, Commandant.
And, Chairman, I yield back.
Mr. Hunter. I thank the gentleman.
Ms. Plaskett.
Ms. Plaskett. Thank you, Mr. Chairman.
And thank you, gentlemen, for being here.
Admiral, thank you so much for the work that you all have
been doing in the Virgin Islands and the Caribbean. And you and
I have had several encounters in both good and bad times, and I
am grateful for the support that you have given to the people
of the Virgin Islands and Puerto Rico as well.
Following the passage of the Bipartisan Budget Act, for the
fiscal year 2018, the administration delivered a wish list of
how it would want to have that funding spending.
I guess my question to you would be, is that reflective of
where the Coast Guard most needs additional funds for the rest
of fiscal year 2018?
Admiral Zukunft. Yes, ma'am. And what I am most encouraged
by is the supplemental relief that we are seeing, especially
from Hurricanes Irma and Maria.
As you well know, the U.S. Virgin Islands and Puerto Rico,
these are Coast Guard communities as well. And so when you see
the Coast Guard is still there, as these communities are still
trying to get back on their feet, these are Coast Guard
families in that very same predicament as well.
So what this supplemental relief does is, rather than build
a house out of straw, let's build one out of brick and mortar.
In other words, let's harden these facilities so they could
withstand at least a category 3 hurricane.
We made a similar investment out of Great Inagua with our
hurricane hangar out there. It experienced 155-knot winds
during Hurricane Irma. It sustained no damage whatsoever.
So we need to use these dollars and invest smartly because
we are in the U.S. Virgin Islands and Puerto Rico for the long
haul. These are Coast Guard communities as well, and we are
proud to be part of those communities.
Ms. Plaskett. OK. I also wanted to ask you, the majority of
the illegal contraband is being interdicted in the eastern
Pacific, but you know there is a significant drug smuggling
threat that reaches the U.S. Virgin Islands and Puerto Rico
from South America.
How will the additional National Security Cutters and the
future Offshore Patrol Cutters defend against this threat? And
do you believe that it is the sufficient amount and the
appropriate number? Would you want more vessels to be able to
take on this threat in that area?
Admiral Zukunft. So numbers do matter. And the National
Security Cutter has clearly been a game-changer. We are seizing
nearly a ton of cocaine a day, and that is between the
Caribbean, the eastern Caribbean, and in the eastern Pacific
today.
What has changed in the last year is we have seen a
significant decrease in the number of Cuban migrants attempting
to cross the Florida Straits. We have a fleet of Fast Response
Cutters home-ported in San Juan, and we have been able to
repurpose those ships and apply a lot more pressure on the
approaches to Puerto Rico, to the Dominican Republic, and to
the U.S. Virgin Islands for shipments that are leaving the
Guajira Peninsula on a direct run, because the flow rate coming
into Puerto Rico right now has gone up over 30 percent.
Ms. Plaskett. It has grown over 30 percent?
Admiral Zukunft. It has grown over 30 percent over the last
2 years. It is not staying in Puerto Rico. It is being
transshipped elsewhere, to include the U.S. Virgin Islands and
to include the continental United States as well.
So we are repurposing resources. All this based on
intelligence.
Ms. Plaskett. And is it the sufficient amount that you need
to be able to address this increasing threat in the area?
Admiral Zukunft. The U.S. will never get in front of this
problem by itself, which is why we need allies. The interagency
is contributing as much. And as many ships as we have put out
there, what we have soon run out of is surveillance aircraft,
which is why we are looking and experimenting with land-based
UAS. We have done a couple of prototypes out of Puerto Rico as
well.
We need to look at state-of-the-art sensors to put into
these unmanned aerial systems. But the intelligence is good. We
do not have enough ships or aircraft to be fully effective in
this mission.
Ms. Plaskett. Thank you.
Administrator Buzby, thank you so much, sir, for your
service. And I wanted to ask you, with regard to the Maritime
Administration, can you tell us what, if any, activities or
support that your agency and your group, particularly your
Ready Reserve Forces and your own fleet, were able to provide
during the hurricane season in the Caribbean?
Admiral Buzby. Yes. Thank you, ma'am.
We were very proud to play a significant role, clearly not
as significant as the Coast Guard who were heavily involved. We
had three of our school ships and one of our Ready Reserve
Force ships active, participating in hurricane relief for all
three hurricanes. We were active in Texas, we were active in
the gulf coast, in Florida, and most heavily in Puerto Rico and
the Virgin Islands.
Ms. Plaskett. Because I know that one of the issues that we
had on the islands was that the inability to have cargo,
particularly food relief and others, come in. I know that most
of your support is not related to those things, but related to
military equipment. But could your fleet also be used to
support the additional food and other supplies and equipment
that were needed in places like Puerto Rico and elsewhere?
Admiral Buzby. Actually our Jones Act fleet of commercial
ships, we had 24 ships that were providing support to Puerto
Rico throughout the thing. So there was plenty of capacity.
But to directly answer your question, yes, there is
additional capacity that could be brought into play with our
Reserve ships to augment that should it be necessary.
Ms. Plaskett. OK. Thank you.
Thank you very much. I yield back.
Mr. Mast [presiding]. The Chair is going to recognize the
gentleman from Louisiana, Mr. Graves.
Mr. Graves of Louisiana. Thank you, Mr. Chairman.
First of all, Admiral, I want to thank you very much for
your service to the Coast Guard and to the Nation. I think we
first started working together about 8 years ago when we were
both in different capacities. And I remember one of us getting
fairly excited and maybe yelling a good bit and things like
that across the table at one another. And thankfully, your
temper has subsided since then.
I am kidding. I might have been the one doing that.
No, but, again, I just want to thank you very much for your
service to our Nation. I also know that your wife and family
have sacrificed much for your service in the time away, and I
do want to thank you.
I know that Chairman Hunter talked to you a little bit
about some of your lessons learned and advice on the way out,
and we are going to keep your cell phone number and keep
bothering you as things progress to continue to get your advice
on how we best handle maritime policy, maritime security, and
many other challenges that our Nation is facing.
But your service to the Coast Guard was one, as we have
discussed at the last few hearings, one of where the Coast
Guard has evolved into sort of this Swiss army knife in this
post-9/11 and evolving-threat era that we are in now, where the
Coast Guard's presence on the water has just continued to
evolve as the threats have. And you all are an extremely agile,
multimission agency. And, again, your leadership during those
challenging times has very much been appreciated. So thank you
very much.
Admiral Zukunft. Thank you.
Mr. Graves of Louisiana. Chief, same to you. I always
appreciate your absolute, unconditional support for the
coasties out there and advocating on their behalf. You have
been a great voice, a very passionate voice for the men and
women of the Coast Guard. And have appreciated very much your
fighting for the people that are on the ground, that are the
people that are literally protecting our Nation on a daily
basis. And I want to thank you for your service as well.
Admiral Buzby, before I jump back to Coast Guard, I want to
jump over to you just for a minute. You have some pretty strong
words for the importance of a domestic fleet in your testimony.
You talked a little bit about the important role that Jones Act
vessels play, U.S.-flagged vessels play in terms of ensuring
that we have the capability to deliver our military men and
women, our equipment around the globe.
And you also talked about some of the challenges associated
with our increasing reliance upon foreign-flagged vessels. I
believe you noted in your testimony that there were 177--give
me a little leeway there--foreign vessels that were used. And I
believe you noted that in at least 13 cases that those foreign
vessels had apprehension, hesitation, or refused to go into
some of these areas where there was tension or conflict. And
that, obviously, is exactly where we need our military men and
women and exactly where we need our equipment.
Do you care to expand or comment on that and just sort of
your vision on how we ensure those types of situations don't
happen in the future?
Admiral Buzby. Thank you for that question, sir.
It really is critical to my way of thinking, and I think to
most of the military, and certainly to General McDew of
USTRANSCOM [U.S. Transportation Command], that we have reliable
sealift for this country. And that has to come from a
combination of Government-owned ships that we hold in reserve
in our sealift fleet, but more importantly, from the U.S.-flag
fleet. Those are the ships that we can rely upon.
And some of the cargo that we have to move is critical to
whatever mission we have to do. And to entrust that to a
foreign-flag ship with an unknown crew, and as we have seen
historically, some of those declined to do that. They declined
to carry that to where we needed to go. And that is simply
unacceptable. We depend on our sealift forces to move our
military overseas, period.
Mr. Graves of Louisiana. Thank you. And I do appreciate you
providing us that feedback or guidance. And I just want to ask
if we can continue to work perhaps offline a bit on steps we
need to take here to ensure that we don't run into those
reliability problems in the future. But I think it does, just
to reinforce as this committee has on numerous occasions, the
importance of having a robust U.S.-flag fleet that can deliver
for us.
Admiral, coming back to you, Admiral Z, the icebreaker is
something we have talked about a good bit over the last few
years. We have had a number of meetings discussing that. I
always get this mixed up--the Polar Star is the one that is
still floating, right? All right.
So the Polar Star, we are in a situation now where the
service life of the Polar Star is already, while you all did a
phenomenal job with duct tape and bubble gum keeping that thing
floating, the service life on it is somewhat tenuous, I think
it is safe to say.
Yet, as I recall, the Coast Guard has indicated that a $2
billion annual investment in a heavy is really what we need to
get us to the place we need to be, to have the capabilities we
need, and also to have a seamless transition from the Polar
Star into a new heavy. I think it is fantastic that the budget
request does have, was it $725 million in there, for a heavy
for fiscal year 2019.
Can you just comment on sort of how those things
transition? Because if the $2 billion figure was our target, if
the service life is, what is it, 2023, I think, on the Polar
Star, it seems like we are going to have a problem, if we are
not fully investing in the program annually.
Admiral Zukunft. Yeah, I am concerned, as I look at the 5-
year budget bill, when I am asking for a $2 billion floor, and
we are seeing our acquisition budget continuing to be funded
below that floor.
And icebreaking is clearly the biggest risk. There is a $15
million annualized appropriation to keep the Polar Star in
service, so there is a smooth hand-off between the Polar Star
and the next heavy icebreaker.
That gets us right back to the status quo, though, and we
are still only a Nation of one heavy icebreaker, which means we
need to continue to build out that program of record. We need
to provide predictability for our shipbuilders as well. Our
shipyards have not built a ship of those scantlings, of that
design, laying up that much steel since these ships were built
over 40 years ago.
It is an investment in our industrial base at the same
time. And this will be built in the United States and with
United States steel as well.
So of all our appropriations, this is the one at greatest
risk, and it does concern me. And there is going to be tension
as we look at, how do we fund other priorities within the
Department of Homeland Security?
And a concern that I will pass on to my relief is you may
enter another cycle of flatline budgets at a point in time
where our needs are continuing to grow, particularly in this
domain.
Mr. Graves of Louisiana. OK. Bottom line is, Mr. Chairman,
I just want to highlight, I think we do have some problems with
this current schedule in that the service life on the Polar
Star, we are looking at 2023. Am I remembering that correctly?
Admiral Zukunft. 2023 is when we anticipate taking delivery
of the first heavy icebreaker. We want to sustain the Polar
Star for 2 years beyond that to make sure as we go through sea
trials we are fully mission ready.
Mr. Graves of Louisiana. OK. So we have got major concerns
with the Polar Star still floating by, I think, 2025 then.
Admiral Zukunft. That is right.
Mr. Graves of Louisiana. And actually having the ability to
replace it with a new heavy. And then, of course, we have you,
in discussions in another formal setting, the administration
has indicated the need also to have medium capacity. And so
that is going to need to come on. And if all we are doing is
$700 million, then we are not able to even deliver the heavy,
much less coming behind on the medium, which is really
important.
If I can change gears real quick. Patrol Forces Southwest
Asia has six 110s right now. We certainly want to make sure
that the men and women that are out there helping to support
our military in that region, that they have the equipment they
need, have the resources they need.
I am a little partial to the FRC [Fast Response Cutter], as
you know, and I just am curious if you could talk at all about,
perhaps, the need or timelines on replacing the 110s with FRC
out there.
Admiral Zukunft. Yes, Congressman. I have had a number of
high-level engagements. I have written when we want to restore
readiness, a letter that went through the Secretary of Homeland
Security that I addressed to the Secretary of Defense, to the
Chairman of the Joint Chiefs.
I have met with General Votel, CENTCOM [U.S. Central
Command], I have met with Vice Admiral Aquilino, he was
commander of the 5th Fleet in Bahrain, with the Secretary of
the Navy, and with the CNO, and that we have a hot product line
that are building these ships on time, on schedule, because the
110s that are there will time-out in 2022.
The PCs that the Navy operates, they will start timing out
a year later. So there is an opportunity, using DoD funding, to
keep this product line going, to reconstitute the fleet that is
over there right now. And we need a decision by 2022 so we can
make those informed decisions to keep that product line going,
to roll out that next fleet of ships.
So, Congressman, that is where it stands right now. And it
does have the highest level of attention from the Secretary of
the Navy on down, to include the combatant commander in charge
of that theater. The return on investment is huge. The mission
is not going away. The demand signal remains high. And so that
is where we stand right now.
But 2020 is where the shipbuilder needs to be informed that
this order is coming in so they can keep that product line
going.
Mr. Graves of Louisiana. Great. Thank you.
Mr. Chairman, there is this weird clock thing in front of
me, I am not sure what that is, but I want to yield back.
Mr. Hunter [presiding]. The ranking member and I stayed
under our time so that we could give everybody else a chance.
We are just happy you are here.
Mr. Graves of Louisiana. Well, thank you very much.
Mr. Hunter. Mr. Lowenthal is recognized.
Dr. Lowenthal. It is a pleasure to join the Garret Graves
show.
Admiral Buzby, I want to ask what to me has become kind of
a conundrum, and let me lay it out. It has to do with the
President's budget request for MARAD's Title XI, the loan
guarantee program. You know, the program has been in operation
for over 80 years. It guarantees financing for the construction
of American-made U.S.-flagged vessels. It is a longstanding
public-private partnership. It has helped to build the U.S.-
flagged Ready Reserve Fleet, supported American shipyards.
These loans were crucial to help finance the construction
of the world's first LNG-powered containership, which was built
here in America.
President Trump talks about reviving American manufacturing
and just last week announced tariffs under a rationale that
certain industries are vital for our national security. I
thought for years we have considered shipbuilding one of those
vital industries.
My first question is, and let me ask the whole thing, is
that still the case? And help me to understand the logic that
if this program has an important role, which you say, and the
President talks about American manufacturing, but the budget
calls for no new authority to guarantee loans. That seems to me
to be a contradiction. Can you respond to that, please?
Admiral Buzby. Yes, sir, happy to.
We believe that it is an important program also. This
really comes down to a funding issue in a very difficult budget
year. It is a good program. It has built over 1,900 vessels for
this country. It has done some good things. It has had some
defaults in the recent past, which have been difficult to get
through, but it has been a general benefit to the Nation.
Dr. Lowenthal. So you are very supportive of the program
and the importance of the program?
Admiral Buzby. I think it has made great benefit to our
country.
Dr. Lowenthal. Thank you.
Acting Chairman Khouri, I have a question. Last year the
subcommittee passed legislation to amend the Shipping Act to
increase FMC's authority to oversee and enforce antitrust
requirements that would prevent the ongoing consolidation among
American--among foreign-flagged containers, not American,
foreign-flagged containers, container carriers, from
disadvantaging the U.S. maritime and port service industries.
And I have been told we expect Congress to clear this
legislation later this year. So my question, when final
agreement is reached, I think, on the Coast Guard Authorization
Act--there are two questions.
One, what is the status of consolidation in the container
trades? Are there now fewer carriers than there were in 2017?
And is there sufficient funding in the administration's
request for the FMC to ensure that the Commission has the
personnel and resources necessary to conduct very effective
oversight during this very kind of dynamic period of
consolidation that is taking place?
If you can tell, do you have the resources? And what is the
latest status on consolidation of the U.S. container trades?
Mr. Khouri. Thank you for the question. Let me answer the
second one first, if I may.
We do have the resources to continue our monitoring of the
ocean industry, ocean container industry. We do have in our
budget money for additional people, especially in our economist
group. We just received notice that we are going to lose two
economists via retirement. That area is sort of the heart and
soul of everything that we do.
So we are actively getting ready. I think tomorrow we will
have new notices for recruiting economists. These are somewhat
specialized transportation economists. But I do feel confident
that we can continue that mission and do it effectively.
On the status, as I said in my testimony, the number of
major carriers has gone from 21 down to 12. There are a total
of 36 different carriers that currently serve U.S. trades. Now,
obviously, the smaller carriers are not up to a scale as a
Maersk or Mediterranean Shipping. However, bear in mind to some
extent, when you have a commoditized marketplace, that the
smaller carriers do effectively, from a pricing standpoint, set
a lid on how all of the other carriers react.
We watch like hawks, I can promise you, the pricing
activities and all of this pricing and decision--excuse me,
capacity decisions are regularly filed with the Commission. We
follow that closely. We see where different carriers are making
pricing decisions this way and that. They are making their
short-term decisions on putting ships in or out of a trade
lane.
And then there are long-term decisions, similar to the
Coast Guard, when you build a ship you have got it for 30
years, that the long-term decisions that various carriers are
making in terms of new-builds continues to show diversity.
So this is all evidence to us that you still have a very
competitive marketplace.
Dr. Lowenthal. OK.
Mr. Khouri. So I think, as we speak today, the Herfindahl-
Hirschman Index, not to get technical, but this is the same
type of analysis the Department of Justice uses to look at
industries, et cetera, that our main East-West trades, Asia to
U.S., and the Atlantic trades are still in a very comfortable,
what is called safe harbor area, under HHI.
So we feel confident that it still has a very competitive
marketplace overall to protect our exporters, our importers,
our consumers, and the various service providers that you
mentioned in terms of the tug companies. So we do feel
confident. We would like to have full funding so that we can go
ahead and hire some of these extra folks into the 2018 and 2019
budget periods.
So that is where we are at this point. Thank you, sir, for
the question.
Dr. Lowenthal. Thank you. And I yield back.
Mr. Hunter. I thank the gentleman.
We are going to start another round of the hearing by
recognizing myself. This is more what it looks like usually
here.
FMC questions really quick. We all raised concerns last
year. And, by the way, we have a bipartisan FMC bill, that is a
Senate bill as well, so it is bicameral, bipartisan, to help do
the things that we talked about last year. I think you got
yelled at by just about everybody up here.
So in regards to that, we talked last year about you
agreeing to allow a group of international car carriers to
collectively negotiate with U.S. tugboat service providers. In
light of the concerns that we have raised, is the Commission
now more closely overseeing negotiations between ocean common
carriers and the U.S. domestic providers?
Mr. Khouri. Thank you for the question. The very short
answer is yes. And just perhaps another sentence or two.
It has been interesting that some of the alliances have
visibly backed away from even pursuing some of that activity.
So I think it was heard by everyone in the industry where the
Congress stands on the issue, and I feel comfortable that it is
in good shape.
And I think the other thing that is in the, if I may, in
the pending bill, I mentioned in my testimony that five
different price discussion--what we call price discussion
agreements, agreements that allow for discussion of pricing, I
just note, I am not going to say because of, but I note that
they have filed agreement terminations at the Commission. So
that is a very positive trend of eliminating price discussion
through the trades.
Mr. Hunter. Mr. Khouri, then, you have seen the legislation
that we have put forward, right?
Mr. Khouri. Oh, yes.
Mr. Hunter. Do you think that gives you more tools in your
toolbox?
Mr. Khouri. Yes, I do. Yes.
Mr. Hunter. OK.
Admiral Buzby, I would ask you more questions, but in the
NDAA and our other committee, we are both on the Subcommittee
on Seapower and Projection Forces, we are both, John and I, we
are both on the Armed Services Committee. You get authorized by
the NDAA for MSP, it gets paid out of DOT, and the difference,
the delta between what we authorized, the $300 million and your
$216 million that you are putting towards MSP with the old $3.5
million number, instead of the $5 million per ship, we are
going to work that.
I am sure we are going to find the money in the Armed
Services Committee, because even though DOT pays for that, the
difference needs to be made up in the NDAA, from what I
understand. So we will work that going forward.
I guess the one question I have is, do you expect if the
number stays at $3.5 million, you have 59 MSP ships now, right?
Admiral Buzby. Sixty.
Mr. Hunter. You have 60 now?
Admiral Buzby. We are up to 60.
Mr. Hunter. What do you expect that to go to? Because when
we made this change it was for a reason. It was because ships
were dropping out, right?
Admiral Buzby. Right. We work very closely with our
operators. They are very supportive of our program. I do not
anticipate anybody that will drop immediately. We will be
working very closely with them, however, if it has to stay at
that lower number. It is a concern, no doubt. They have voiced
their concerns. We are concerned about it. We would have liked
to have absolutely funded it to the $300 million level, but
just budget-wise we were restrained.
Mr. Hunter. But also it looks like you have got money in to
build two merchant mariner training ships--not to build, to
buy.
Admiral Buzby. Right.
Mr. Hunter. Right? And those would not be U.S. built?
Admiral Buzby. They could be.
Mr. Hunter. They could be U.S. built, but the numbers you
have I don't think are.
Admiral Buzby. Well, if we have to go out and get used
ships, the estimate is that to purchase a used ship and then
convert it, it would be about $200 million or so to do that for
a used ship to then modify it.
Mr. Hunter. And right now you have two in there, right, you
have the money for two?
Admiral Buzby. Right now the language calls for two for
$300 million.
Mr. Hunter. OK. But you could theoretically build one.
Admiral Buzby. We could build--that same number, that 300
number----
Mr. Hunter. And put the money back to MSP.
Admiral Buzby. It is theoretical, but, yes, sir.
Mr. Hunter. Those are all possibilities.
Admiral Buzby. It is a possibility. And we look forward to
working with Congress on this.
Mr. Hunter. Thank you.
Mr. Garamendi.
Mr. Garamendi. Just to follow up on some questions the
chairman raised.
How many ships would be in the MSP fleet if the 29-percent
cut were to take place?
Admiral Buzby. In other words, if we were to fund it to the
$3.5 million, we believe that all 60 ships would remain, sir,
at this point at least.
Mr. Garamendi. So you intend to negotiate down the subsidy
per ship?
Admiral Buzby. That is something we would have to kind of
look at. You know, that is a policy thing we would have to talk
to the Secretary about for sure.
Mr. Garamendi. Well, you also talk to us about these
things.
Admiral Buzby. Certainly.
Mr. Garamendi. I think the chairman and I have made it
clear where we are coming from on this. We think the MSP
program is exceedingly important and that the subsidy level at
$5.2 million was necessary.
Also, I note that the administration proposes to end the
Public Law 480 program, which I think directly affects the MSP
issue. I don't see the logic of that. I think that I don't see
the logic of most of that budget, to be quite frank about it,
except we are happy to have the additional money for the Coast
Guard, as long as they spend that money appropriately on the
things that we are talking about.
We talked earlier about the multimission training vessel
and the $300 million. I want to be very, very clear where I am
coming from. I think this committee is supporting that position
that we are not going to buy a foreign-built ship, we are not
going to abandon the multimission.
So what does it cost to build those multimission ships?
Admiral Buzby. A single vessel we estimate about $302
million. If we were to build two or three, it drops down to
about $280 million to $290 million.
Mr. Garamendi. So we would need somewhere around another
$300 million over the course of the next couple of years to
build two of those multimission ships.
What is the purpose of a multimission ship? What is the
multimissions?
Admiral Buzby. The reason that we are building the ship and
calling it a National Security Multimission Vessel is its
primary mission will be as a training vessel for the State
maritime academy that it would be assigned to.
Its secondary mission would be, as we have seen this past
summer, it would be used in a natural disaster relief sort of
role, and as designed would have good capability to perform
that role even better than our ships that were not purpose-
built.
Mr. Garamendi. And these rusty hulks that are being
discussed to be purchased, would they be able to do the
multimission?
Admiral Buzby. They would have some capabilities, clearly
not as much as a ship that was purpose-built for that mission,
no, sir.
Mr. Garamendi. So we have got to find a couple hundred
million dollars to build the two ships and do it right the
first time, right? Correct?
Admiral Buzby. That would be the best way to go forward,
yes, sir.
Mr. Garamendi. I am sorry, that would be the----
Admiral Buzby. The very best way to go forward.
Mr. Garamendi. The very best, most wonderful, beautiful
way.
Admiral Buzby. If we can all afford it, yes, sir.
Mr. Garamendi. I am learning the language of the
administration.
We talked earlier about a big, beautiful, wonderful, border
wall with steel that now has a 25-percent tariff on top of it,
so the cost probably will end up some--but, in any case, that
$18 billion. Admiral Zukunft, you said there were how many
metric tons of cocaine did you seize on the low seas, the high
seas?
Admiral Zukunft. 233 this past year.
Mr. Garamendi. My information that I have received recently
is that on the entire land border about 20 metric tons were
seized. That is about one-tenth of what you seized on the high
seas.
Admiral Zukunft. What is most vulnerable is where it moves
in bulk, and that moves predominantly in the maritime domain
way beyond our border.
Mr. Garamendi. So my message to the President is, from
yesterday, he seemed to be really interested in stopping the
importation of drugs, the illicit drugs coming into the Nation.
And if he really wanted to get the best for the money, he would
fund the Coast Guard. It is 10 to 1. You don't need to comment,
but I put that out there.
Mr. President, we want to stop illegal drugs entering the
United States. You want to spend your money in the very best,
most efficient way possible. Take the $18 billion, spend some
portion of it to rebuild the fences that we presently have.
They can be big, beautiful fences or walls. But don't spend $18
billion that way. Spend it where it has the most effect, which
is the U.S. Coast Guard.
And you need autonomous vehicles, drones and the like. You
need better capability. You continue to work with the Latin
American countries. All of this takes money.
And so if we want to get the very best, most efficient way
to stop drugs coming into the country, it is the U.S. Coast
Guard, not a beautiful wall paid for by the American taxpayers.
Enough of that. I think I am out of time once again, Mr.
Chairman. Excuse me for being so blatant.
Mr. Hunter. We actually did great compared to the other
Members today.
Admiral Zukunft, I have one last question. The fiscal year
2017 approps, you had about $1.3 billion. This year, even
though you are under a CR [continuing resolution] still, it
will be $1.8 billion minus the months we have been in the CR,
but it will be at $1.8 billion level, if everything goes the
way it is supposed to go; 2019, you are almost at $1.9 billion.
So you have 2 years at about $1.8 billion, $1.9 billion.
But 2020 it drops down to $1.4 billion. It doesn't go above
$1.7 billion. It never reaches $2 billion at all going forward.
Is that because we are just looking out basically 2 years at a
time, or is that because of some other reason?
That is a precipitous dropoff. That is a $400 million drop.
Admiral Zukunft. Right. Where you see the dropoff is in the
polar icebreaker program. And this is at a point in time where
we will have awarded final design, and we will be in a position
to make an informed decision to do a block buy.
And so that is a concern when I see that precipitous of a
drop, because that drop is mostly in the polar icebreaker
building program. So that is a significant add-on that we are
going to need going forward in order to look at----
Mr. Hunter. So you are saying from 2020 forward, that does
not include icebreaker funding?
Admiral Zukunft. Well, where we see that significant drop,
it really comes within the icebreaking account. That accounts
for almost all of that reduction of nearly $500 million.
Mr. Hunter. Gotcha.
OK. That is all I have.
Mr. Garamendi.
Mr. Garamendi. Two more very quick questions.
This is kind of like your mantra, Mr. Chairman, and you
have gone through all of the reports that we have not received
in the timeliness of those, and I appreciate you continuing to
stay on that issue.
However, Admiral Buzby, there is one other report that we
authorized or asked for in 2014. The previous administration
didn't get it done, although I understand there was a draft
that was held up in OMB. So where is the National Maritime
Strategy?
Admiral Buzby. Thank you for that question.
I am pleased to report that the National Maritime Strategy,
in its revised state, has left my desk. It is now routing
through my staff, prior to going up to the Secretary. And I
believe it will be going very quickly.
It was a good piece of work. It needed just some touching
up. I participated in its construction as a contributor
earlier, prior to this current position.
So it is moving along. My goal is to deliver it to you,
sir.
Mr. Garamendi. I think I have heard this before, with no
offense to your good efforts. But please understand that we
await that. And your good efforts were repeated--actually you
repeating the good efforts of your predecessor--and it got held
up somewhere above your level.
Admiral Buzby. Yes, sir.
Mr. Garamendi. We look forward to that.
Second question. It looks to me like the FMC isn't going to
be able to have a quorum. This seems to be a problem that
plagues the administration on appointments. I think Mr.
Maffei's appointment ends in June and then you will be down to
two people.
Mr. Khouri. It is my understanding that even with two we
still have a quorum. It is also my understanding that the
Surface Transportation Board has operated with one and they
continue to do business. I am not suggesting that that is
recommended, optimal, or anything else, but our charter does
not prevent us from continuing to operate.
I think each independent agency, you have to look at their
individual charter to see what is required for a forum. But it
is something we have thought about and looked into,
Congressman.
Mr. Garamendi. I think by raising the question, I make my
point. If one were to look at the White House, it appears as
though there will be one person there also.
Thank you so very much. I yield back my time.
Mr. Khouri. Thank you.
Mr. Hunter. I thank the gentleman.
I thank all of you for being here and sharing with us and
your testimony.
Admiral, again, Master Chief, whatever you guys say in the
Coast Guard, fair wind, safe travels, good seas, all those
things. Thank you very much for your service to this Nation. It
will be remembered. Thank you.
We are now adjourned.
[Whereupon, at 12:35 p.m., the subcommittee was adjourned.]
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